Stock market: Elon Musk sold Tesla shares with a vengeance, he will pay a colossal amount of taxes

Elon Musk’s star is going out in the firmament of the planet’s great fortunes. For a while, the richest man in the world, the capricious billionaire, founder of Tesla and successful businessman (Paypal, SpaceX, etc.), had to relinquish his crown to Bernard Arnault (main shareholder of LVMH, whose market only rises to 400 billion euros). And this, against the background of Tesla’s descent into hell, divided by 3 since the all-time high recorded in November 2021, when the American electric car giant’s stock exchange quote was 13 digits (with a very above 1 trillion dollars).

Tesla’s very negative stock market trajectory was rightly anticipated by Momentum, Capital’s premium stock market investment letter and newsletter, which warned its subscribers with excellent timing of the risk of a sharp drop in stock (especially with based on technical analysis), a few months ago. Tesla stock’s descent into hell is due to several factors. Overview.

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First, the auto market is under pressure and its prospects are at half-mast. “It will continue to be very difficult in the coming years”, predicts Optigestion, interviewed by Capital. And this, after the already difficult years of 2020, 2021 and 2022, marked by the Covid-19 pandemic and its consequences for the economy, the closure of China (which only very recently turned its back on its strict zero-Covid) and the deterioration of the global economy in a scenario of war in Ukraine and explosion of inflation (which weighs on the purchasing power of families and weighs on their consumption, including electric vehicles despite the growing market share). “Disruptions in the production supply chain, parts shortages and semiconductor shortages have severely tested the entire automotive industry,” says Optigestion in this regard.

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Tesla was not spared, not least because China is an important link in its global presence. And Chinese automakers are seeing a rise. They will overshadow Tesla and other western automakers for years to come. “The coming intensification of Chinese competition will drive vehicle sales prices down, which will hurt Tesla and other manufacturers’ margins. Tesla is gradually losing its premium side as the high-end offering from Chinese competitors tends to expand. As the supply of quality electric vehicles increases in the face of demand, sales prices tend to fall. And Tesla’s Model 3 does not escape this phenomenon”, underlines Optigestion.

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In the fourth quarter of 2022, Tesla disappointed financial analysts with vehicle deliveries, which fell short of expectations despite aggressive cuts in selling prices. And the prospects, degraded, are uncertain. For 2023, the specter of recession should weigh on demand for electric vehicles, which worries equity investors.

The latter also sanctioned Elon Musk’s lesser involvement in Tesla’s management, with the billionaire busy straightening out Twitter. And to finance this major acquisition, Elon Musk also had to sell tens of millions of Tesla shares, thus mechanically increasing the pressure on the auto giant’s stock market. According to data from VerityData, Elon Musk sold a total of 94,202,321 Tesla shares in 2022, at an average price of $243.46 per share, for pre-tax revenue of approximately $22.93 billion. Overall, Musk has sold nearly $40 billion worth of Tesla stock since an all-time high in November 2021.

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Excluding taxes related to the exercise of stock options, and in the absence of a specific tax on the disposition of securities in Texas, Elon Musk will have to pay a 20% tax on Tesla shares sold in 2022 under the ” federal tax on capital gains”, notes Jean -François Fliti, partner at Allure Finances interviewed by Capital. A prospect that should compel Elon Musk to write a $4.59 billion tax check to US tax authorities…

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